Who pays for tariffs?

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Speaker 4 Are tariffs starting to bite yet? We'll find out more this week from American Public Media. This is Marketplace.

Speaker 4 In Baltimore, I'm Amy Scott in for Kai Rizdahl. It's Monday, the 14th of July.
Good to have you with us.

Speaker 4 President Trump said today he's open to negotiations with the European Union after announcing a 30% tariff on EU imports over the weekend.

Speaker 4 It was the latest in a flurry of new tariffs the Trump administration has announced, now set to kick in August 1st.

Speaker 4 The big question since all the back and forth on tariffs began back in April has been: what will it all mean for inflation?

Speaker 4 Tomorrow we'll get the latest read with the Consumer Price Index for June, followed by the Producer Price Index on Wednesday.

Speaker 4 Marketplaces Samantha Fields checked in with a few economists to see what they'll be watching for.

Speaker 5 I don't think you'll be surprised by the big question on every economist's mind.

Speaker 6 Are we going to see in the inflation report tomorrow signs that tariffs are starting to show up?

Speaker 5 Kevin Jakes, a former financial economist at the Treasury Department, says analysts have been watching for any rise in consumer prices for the last few months.

Speaker 6 U.S. firms have done a really good job so far of absorbing some of that.

Speaker 5 Many companies stockpiled inventory to avoid raising prices for as long as they can.

Speaker 5 But Jake says there are things you can't really stockpile, like food, and he'll be looking to see whether the cost of imported fruits and vegetables is creeping up.

Speaker 5 Jed Kolko at the Peterson Institute for International Economics will be looking more closely at the prices of core goods, things like cars, computers, dishwashers, and clothes.

Speaker 8 Physical goods, aside from food and energy, because that's where we would expect price effects from tariffs to show up most strongly.

Speaker 5 Still, Alan Dettmeister at UBS says we might not see much increase in prices for another month or maybe a couple.

Speaker 9 Really by the September CPI that is released in October, if we haven't seen it yet at that point, that would be a pretty big surprise.

Speaker 5 But he says if we do see a jump in the June numbers, take it with a grain of salt.

Speaker 9 You never want to pay too much attention to any one month change in basically any of the macro data.

Speaker 5 Unless all of it, CPI, PCE, private data, starts moving in the same direction all at once. I'm Samantha Fields for Marketplace.

Speaker 4 It's earnings week for the big banks. Starting tomorrow, we'll hear from JPMorgan Chase, Wells Fargo, Bank of America, Goldman Sachs, and Morgan Stanley.

Speaker 4 Because banks touch so many parts of this economy, their quarterly reports can be a kind of barometer. Daniel Ackerman has a preview.

Speaker 10 Things are looking pretty good for the big banks, says Gerald Cohen of UNC's Keenan Flagler School of Business.

Speaker 11 Overall, you're seeing growing loan demand, a growing deposit base.

Speaker 10 And as for all the tariff-induced chaos in recent months, turns out that's good for big banks too, says Myra Rodriguez Valladares, managing principal of MRV Associates.

Speaker 12 Because they have huge trading desks, so they can actually really profit from all the volatile movements in the stock market and the bond market.

Speaker 10 And when banks issue their forward guidance in the next few days, they'll be looking ahead into a different business environment, says Kenneth Leon, research director at CFRA.

Speaker 11 Namely, a much more friendly, less regulatory framework.

Speaker 10 For instance, the Trump administration wants to loosen the so-called supplementary leverage ratio.

Speaker 10 That's a rule put in after the 2008 financial crisis, which limits how much big banks can use debt to fund their investments.

Speaker 11 Loosening it would give the banks more capital to use in the business, particularly lending.

Speaker 10 That could increase bank earnings in the near term. Adnat Admahi is a professor of finance at Stanford.

Speaker 10 Admahi says if banks put too much money into risky assets like crypto, it could backfire. And when the big banks get into trouble, Admahi says, so does everyone else.

Speaker 10 I'm Daniel Ackerman for Marketplace.

Speaker 4 On Wall Street today, no signs of trouble. We'll have the details when we do the numbers.

Speaker 4 Ever since the president's so-called Liberation Day in early April, businesses all over the country have been trying to figure out how to deal with the added cost of the Trump administration's tariffs.

Speaker 4 Some of them are simply passing the import tax onto their customers in the form of higher prices. Others are absorbing the costs themselves, and a lot of them are mixing both approaches.

Speaker 4 Wherever a business lands involves some haggling along every step of the supply chain, Marketplace's Justin Ho reports.

Speaker 13 A few weeks ago, Ken Gidden went to a trade show to order some suits to sell in spring of 2026 at the men's clothing stores he runs in New York called Rothman's.

Speaker 13 When he was there, he met with an importer that's supplying some of Gidden's merchandise for this fall from Italy.

Speaker 14 And the guy said, oh, by the way, the fall stuff is 5% more.

Speaker 13 Gidden says he booked these suits months ago and already agreed on a price.

Speaker 14 So the debate is, you know, do we stick to an agreed upon price that we agreed upon six months ago, or do we consent to the higher prices that were added on because of the tariffs?

Speaker 13 Gidden says he really really doesn't want to have to pay those higher prices.

Speaker 13 He doesn't want to have to charge his customers more, and he's not sure whether that 5% bump is fair, since he doesn't know how much his supplier is paying for those suits or in tariffs.

Speaker 14 And so the negotiations are intricate because we don't really know the other side's position. And that makes it complicated and sometimes contentious.

Speaker 13 And if Gidden can't bargain down that tariff charge?

Speaker 14 We might walk away.

Speaker 13 And hopefully it won't be a permanent end, but you know it'll be a season we'll take off with these guys it's not easy being on either side of these negotiations i think i had a solid week where it was every client that i dealt with was very upset that's catherine reynolds she handles imports for palmetto tile distributors in columbia south carolina She says many of the suppliers of the tile she orders for her clients have been making her pay tariff surcharges, and she says she has no choice but to pass those along.

Speaker 15 We can't absorb the difference there. That's not sustainable.
So we've got to maintain our margins as well because we know what it costs to run the business.

Speaker 13 Reynolds says she started baking the cost of tariffs into her base prices.

Speaker 15 And then they don't see that separate line item and it doesn't feel like a slap in the face, so to speak, or like they're being nickeled and dimed.

Speaker 13 And she says so far that has gone over a lot better than hitting customers with a separate tariff charge.

Speaker 15 But it's just for some reason, when they see that T word, it just kind of sets them off a little bit.

Speaker 13 Other businesses are taking the opposite approach and embracing tariffs in their negotiations with customers.

Speaker 7 You got to use the word tariffs, and then you can put surcharge after it, but if you don't have the word tariffs, you're going to have a really hard time getting any more money from anybody.

Speaker 13 That's Richard Leo, the owner and CEO of Norman Wright Mechanical Equipment Company, which sells HVAC equipment to contractors. Leo says his strategy is to be as transparent about tariffs as possible.

Speaker 13 because at this point, he says his customers should expect them.

Speaker 7 What we're saying is, hey, just turn on any TV station. You're seeing it.
It's not something we're making up, the manufacturer's making up. It's real.

Speaker 13 But Leo's company is selective about passing along the cost of tariffs. It only does it when they're really steep, think 20 or 30%.

Speaker 13 Otherwise, he'll likely just eat the cost.

Speaker 7 And say, look, we're just going to take care of it, but moving forward, we're going to have to charge you for it.

Speaker 7 So it really depends on the relationship we have with the customer, how much they buy from us.

Speaker 13 And Leo says if it's a good customer, a dispute over tariffs just isn't worth it i'm justin hoe for marketplace

Speaker 4 Housing discrimination isn't just history. In some neighborhoods, it's still written into the paperwork.

Speaker 4 Many of the deeds that transfer when a property sells still include restrictive covenants aimed at preventing sales to certain groups based on race, ethnicity, or religion.

Speaker 4 Language that was ruled illegal decades ago, but never removed. Groups of volunteers here in Maryland have been trying to change that, one deed at a time.

Speaker 4 John Morgan wrote about the effort in the Baltimore Banner. John, welcome to the program.

Speaker 3 Hi.

Speaker 16 John, what are these housing covenants and why do they exist?

Speaker 3 Well, these are restrictions that were put in place in homes starting in really the 1800s, but became very popular in the 20s until they were rendered essentially unenforceable in the 1950s.

Speaker 3 But as the country was growing and communities were adding new homes and suburbs are being invented,

Speaker 3 many people decided it would be best if they were all white.

Speaker 3 So there were a series of steps taken to ensure that with the encouragement of the Board of Realtors, which was new then, a predecessor to the Board of Realtors.

Speaker 3 In 1924, they created some model of covenants that could be added to home deeds in communities as they were being constructed that would explicitly deny the ability of blacks or, in some cases, Asians, in some cases, other racial groups to buy these homes.

Speaker 16 Aaron Powell, and not only did the federal government allow this, it actually encouraged it before the the Fair Housing Act of 1968?

Speaker 3 Yes,

Speaker 3 it certainly did. It was a requirement to get an FHA loan, which is what was used to develop a lot of our suburbs today.

Speaker 3 So the federal government was very much part and parcel of this movement.

Speaker 16 So how would a homeowner go about finding out, first of all, if this language exists in their deed or in an older version of the deed of the house, and how to get rid of it?

Speaker 3 You can go through the digital records of your own deed online. And in Maryland, it's a state office that compiles these.

Speaker 3 And you create an account, you go through, and you have to go back over each of the transactions that's taken place.

Speaker 3 In the case of my house, which was built in 1926, it's been bought and sold several times. So I finally got back to the last one, or the first one in 1926.
And it was very stark language there.

Speaker 3 It really sort of takes your breath away.

Speaker 16 What did it say?

Speaker 3 Well, it was written in very neat cursive in 1926. And it said that I can't distill distill alcoholic beverages in my house.

Speaker 3 Any structure has to be so many feet from a road, and I cannot sell or rent to anyone of Negro extraction.

Speaker 3 A lot of these contained a proviso that said you could have a black person living there, but only if they were a servant for a white owner.

Speaker 3 And it's so matter of fact when you see this language written out that it just, like I said, it takes your breath away.

Speaker 16 Yeah.

Speaker 16 So Maryland passed a law recently to try to make it easier to remove this language or to strike it from covenants. How does that work? And is there a similar effort in other states?

Speaker 3 Yeah, the movement started in about 2017 or so at the University of Minnesota where a researcher, Kirsten Delagrad,

Speaker 3 was doing research on housing discrimination and decided to go out and map all the covenants in and around Minneapolis. And they found an enormous amount of them.
And they published those online.

Speaker 3 And a state lawmaker there in Minnesota saw this and recognized that his own home lived in one of these communities. So he passed a law, passed, I believe, unanimously, in the Minnesota State House.

Speaker 3 And since then, 22 states, including Maryland, have passed laws that make it easier to amend your deed,

Speaker 3 and it streamlines the process.

Speaker 3 So in Maryland, there's a form online that you can print out.

Speaker 3 You find your deed, you draw a line through the offensive language, and then you fill out this form and you send it into your county attorney's office, and then it gets filed with the recorder of deeds.

Speaker 3 And the researchers are careful to point out it doesn't eliminate this history.

Speaker 3 It will remain there, but it voids it permanently because there's been complaints that we're just trying to erase history.

Speaker 16 Well, how do advocates respond? I mean, even if this language is not legal, it's not enforceable, it's not actually limiting the sale of a home to anyone,

Speaker 16 why does it matter that that language is there?

Speaker 3 Well, they think it sends a powerful message to future generations and to current homeowners.

Speaker 3 One of the organizers I spoke to said, we need to understand our privilege, and part of understanding our privilege that we enjoy is understanding how it came about.

Speaker 3 And on a practical level, Supreme Court precedents can be overturned, legislation can change. So this assures that these covenants will never be enforceable again.

Speaker 16 John Morgan wrote about racial covenants in deeds for the Baltimore Banner.

Speaker 4 Thank you so much.

Speaker 3 Thanks, Amy.

Speaker 4 Coming up.

Speaker 18 Bodies are aching a little bit, but that's understandable being 60.

Speaker 4 The age of work in the UK. But first, let's do the numbers.

Speaker 4 The Dow Jones Industrial Average rose 88 points, 2 tenths percent, to close at 44,459. The NASDAQ stretched 54 points, 3 tenths percent, to finish at 20,640.

Speaker 4 And the SP 500 gained 8 points, a tenth of a percent, to end at 6,268.

Speaker 4 Let's check on some of the banks Dan Ackerman was telling us about. JP Morgan Chase climbed 6 tenths percent.
Citigroup added 9 tenths percent. Wells Fargo bumped up 1%.

Speaker 4 Golden Sachs lifted 1 and 2 tenths percent, Morgan Stanley was up 1 and 2 tenths percent. You are listening to Marketplace.

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Speaker 4 This is Marketplace. I'm Amy Scott.
People have been worrying about U.S. debt basically ever since there was a U.S.

Speaker 4 Back in 1787. Thomas Jefferson even wrote, the accumulation of debts is a most fearful evil.
At the time, the national debt was around $40 million.

Speaker 4 Today, it's closing in on $40 trillion.

Speaker 4 And the GOP spending bill recently signed into law by President Donald Trump will add another $2.4 trillion in the next decade, according to the Congressional Budget Office. At the same time, the U.S.

Speaker 4 economy is bigger and more powerful than Jefferson could have imagined. So, how worried should we be?

Speaker 4 Stacey Vannick-Smith Vanick-Smith takes a look at what happens if we just ignore the debt and move on.

Speaker 22 The national debt. It has been the subject of scary headlines, congressional battles, dire economic predictions forever.
But right now, the U.S.

Speaker 22 debt is at a record high, and the economy is looking pretty good. Unemployment is near record lows.
Inflation is under control. So

Speaker 22 what's the problem?

Speaker 11 Part of the problem, it's been this kind of boy who cries wolf type thing, and then people just got tired of it.

Speaker 22 Kent Smeters is an economist at Wharton who has been crying wolf about the debt for years. And he wondered, what exactly happens if the U.S.
just doesn't deal with its debt?

Speaker 22 He got a few economists and mathematicians together to build a computer model of the economy to play out scenarios.

Speaker 11 So this model is life cycle overlapping generations model. It's kind of the workhorse model in the field of public macroeconomics.

Speaker 22 To map out the entire U.S. economy across decades, though, they were going to need a bigger workhorse.

Speaker 11 This math problem was a big one, and the model computations are about 20,000 times bigger than our standard model.

Speaker 22 Big math energy, which needed big computing energy. So Smetters borrowed some from Amazon and NASA, and then he and his colleagues fed the entire U.S.

Speaker 22 economy and all of its complicated glory into the mega model.

Speaker 23 Their economic models crashed when trying to project out the economy over the long term.

Speaker 22 Jessica Riedel is an economist with the Manhattan Institute who studies the budget.

Speaker 23 We cannot even model out a functioning long-term economy under current debt projections.

Speaker 22 The crash itself, not super cinematic, says Smeters. No flashing red letters, no skull and crossbones, no lightning bolts.
Just a few words. Words that make a macroeconomist's blood run cold.

Speaker 11 Model not converging.

Speaker 22 Model not converging.

Speaker 11 The model is trying to find what's called this fixed point where everything just adds up. Everything's consistent and it's not able to do that.

Speaker 22 In other words, if the debt keeps rising at its current rate and we just do not deal with it, Even thousands of NASA and Amazon computers all working together cannot get the math to math.

Speaker 11 Really, it's a question of how far can we go before the bond market says, I just don't believe that you're going to pay us back.

Speaker 22 Bonds are like little loans, and the U.S. government sells billions of dollars worth of bonds every week.
The interest rate it pays on those loans, super low, because people know the U.S.

Speaker 22 is good for the money. I will use The Simpsons to explain.

Speaker 22 If this were Springfield, the U.S. would be like Mr.
Burns taking out a loan. The bank would give him a really good interest rate.

Speaker 3 Excellent.

Speaker 22 He's rich, he's got a great job, he's got a big house. The bank is not going to lose its money.

Speaker 22 Homer Simpson, on the other hand, maybe has some credit card debt, kind of modest income, some impulse control issues.

Speaker 18 Go nuts.

Speaker 22 The bank would probably charge him a much higher interest rate for the same loan.

Speaker 3 Don't!

Speaker 22 Economist Jessica Riedel says the U.S. might be entering its Homer Simpson era.
The country's got so much debt, and it's outpaced what the economy earns.

Speaker 23 The debt is projected to go from 30 trillion to 200 trillion over the next 40 years. Yes, you heard that right.
From 30 trillion to 200 trillion. That will cause interest rates to rise.

Speaker 23 Within a decade, interest is going to be one-third of all your taxes. And in a couple decades, interest could be 80% of your taxes.

Speaker 22 That is when the debt hits the fan. If most of the country's money is going to paying interest on the debt, it can't be invested into growing the economy or filling potholes or improving schools.

Speaker 22 It's just going to pay interest.

Speaker 22 That is when an economy starts to shrink. Services shut down, things stop working, businesses stop growing, start laying people off.

Speaker 22 So how long do we have before this happens?

Speaker 11 According to Kent Smeters' model, it'd be roughly about 20 years.

Speaker 22 20 years until the math stops mathing.

Speaker 11 The good news is we can actually make decisions now today that actually would stabilize the amount of debt relative to the size of the economy.

Speaker 22 Smeters and his colleagues published a list of reforms that could help fix the budget. Among them, raise the retirement age to 70, add a carbon tax, reduce social security benefits.

Speaker 22 The chances of the government doing all that?

Speaker 11 I'm not for the politics, but I would give it 5%.

Speaker 22 Okay, so not great,

Speaker 22 but still better than the odds of our current path working out, says Smeters, which is 0%.

Speaker 22 In New York, I'm Stacey Bannock-Smith for Marketplace.

Speaker 4 Kai is out of town, as you might have guessed. He and ADP chief economist Neela Richardson are in London reporting the latest installments of our series, The Age of Work.
The U.S.

Speaker 4 workforce, as we've been telling you, is getting older. Something like 4 million people are hitting retirement age every year now.

Speaker 4 That phrase, demographics is destiny, is a real thing and it's going to have enormous economic implications in a lot of places.

Speaker 4 The team in London sent us this snapshot of a worker not quite ready to wind down.

Speaker 18 My name is Max Wallace and I'm the director, founder and principal instructor of Health Defense CIC.

Speaker 18 I'm a former professional boxer. Health Defense CIC was set up

Speaker 18 I believed I could make the community healthy

Speaker 18 mentally, physically, and spiritually through boxing and doing the boxing fitness.

Speaker 18 And it's not all about going forward with aggression, punching away. It's about movement, it's about thinking, is to know when to react and when not to react.

Speaker 18 a few more clients have come in but i i still need more to um to basically

Speaker 18 make it

Speaker 18 financially advisable if is that the right one um

Speaker 18 yeah i i i didn't set this up to be a millionaire or anything but yeah i i do need my income to be to be better

Speaker 18 i get by by sort of

Speaker 18 try to save as much as I can, then I pay off certain things,

Speaker 18 then I save a bit more, then I pay off other things.

Speaker 18 I'm just

Speaker 18 about keeping my head above water.

Speaker 18 Hopefully, it will become better. I'm speaking to a couple of people at the moment, people that can offer me grants on certain projects I will be doing.
Yeah, I'm following that lead at the moment.

Speaker 18 yeah i don't feel 60. um

Speaker 18 body's aching a little bit but that's understandable being 60.

Speaker 18 i've invested um not only my life um my funds my savings

Speaker 18 i even um

Speaker 18 cancelled a pension scheme it means everything to me

Speaker 4 Max Wallace, Health Defense CIC in London is his company. Kai and Neela are live from London tomorrow with lessons of the aging labor force there and how they might help us here.

Speaker 4 This final note on the way out today, the Port of Los Angeles reported its busiest June ever as importers rushed to beat potential higher tariffs later this year.

Speaker 4 The increase followed a slump in May when President Trump's 145% tariffs on Chinese goods slowed imports. Those tariffs were then cut to 45% as part of a truce that expires in mid-August.

Speaker 4 The port's executive director, Gene Soroka, said the June surge highlights the tariff whipsaw effect from U.S. trade policy.

Speaker 4 Amir Babawi, Caitlin Esch, John Gordon, Noya Carr, Amanda Peacher, and Stephanie Seek are the Marketplace editing staff. Kelly Silvera is the news director, and I'm Amy Scott.
We'll see you tomorrow.

Speaker 4 This is APN.

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